06 Marketing

MARKETING

MARKETINGEngineering EntrepreneurshipSecond Semester of A.Y. 2014/2015International ProgramCivil Engineering DepartmentFaculty of EngineeringUniversitas Atma Jaya YogyakartaINTRODUCTIONMarketing is much more important than capitalIf you already have a market, be an entrepreneurMany innovators are afraid of being an entrepreneur due to uncertainty in marketingPRODUCT of MARKETING firstProduct & production oriented have been long left now: market orientedMarketing before the product:Who are my customers? Man, woman, unisex?Is the product related to age?Is the product for certain area or anywhere?If you want to sell anything you will sell nothing. If you say that your product can be used/worn by anyone, then no one will buy.PRODUCT or MARKETING firstNext questions:Is the product/service really needed?How to change need to be demand?How much would the customers like to pay?What is the size of the product?How many will the production be?Made by order, e.g. house, apartment, ship, airplane, vehicleMARKETING STRATEGYGuide the entrepreneur reaching the goals under controlled cost and optimum resultMarket determines product specification, need, price negotiation; market is always in front of productionAnomaly: customer likes the product in the test but the product is not at all saleable & business has to be closed, & vice versaANECDOTIf you can sell product needed by customer, its brand is popular, you are a class 3 salesmanIf you can sell product which is not needed by customer, its brand is popular, you are a class 2 salesmanIf you can sell product which is not needed by customer, its brand is not popular or even without any brand, you are a class 1 salesman

Marketing is not just concept, it has to be moved, flown its soul, managed together with salesmenMarketing has to have strategy & incentiveIn New York: someone packs cows dung into a ceramic bottle with cow picture & writing: Bullshit! It is liked so much by tourists.

American Marketing Association(benchmark institution in marketing)

Marketing is a process of planning, concept execution, price setting, promotion, distribution of idea, product, & service to create exchange that satisfy individuals & organizations goal

Kotler & Lane (2007)Marketing is a social process in which individuals & groups obtain what they need & want, by creating, offering, & freely exchange valuable product with other partiesDrucker (1954)Marketing is not extension of sellingMarketing is not a special activity but an overall business seen from angle of final target, i.e. customerIn any business, only marketing & innovation that create value, others only create costHow about labor value or cost?APPLICATION of MARKETINGConsumer goods (final customer), e.g. shoes, food, watch, clothes. The company is involved in consumer marketing.Industrial goods (to be used by company or organization producing other product), e.g. construction material, raw material, chemical material. The company is involved in industrial marketing.Service (intangible product), e.g. time, skill, restaurant, beauty salon, spa, travel agent most are not pure service but combination with physical productIdea, e.g. community service commercial/advertisingMARKETING STRATEGYStrategy: a way to achieve goal need to know current position & what goal to achieveStrategy helps entrepreneur to achieve goal more effectively based on mature assessments & thought, being different from common entrepreneur who owns business just to liveEntrepreneur uses strategy to grow significantly & sustainable, achieve prosperous goalStrategy is required to create excellence of competitivenessMARKETING STRATEGYNew entrepreneur: do not spend long in thinking about strategy, immediately start, face reality, keep asking customers & think about their feeling, think about what makes them come back & repeat order & even recommend their friend to buy your productMcCharty et al. (1998): customer satisfaction orientedHuman is satisfied when he/she gets perceived value while exact value cannot be measured

MARKETING STRATEGYPerceived value = perceived benefit perceived costIncrease value by:Increase benefit orReduce costIncrease benefit by:Provide quality product-Complete featuresMoney back guarantee-Touching designGood service-Good tasteOptions availability-Good voiceReady stock-Psychological aspects: friendly staff

14MARKETING STRATEGYReduce cost by:Right locationEfficient production costEasy accessNo long queueCompetence staffCertain price (not easily change)Wide available information

TECHNICAL STRATEGYWho will be customerHow to build brandObjectiveSegmenting& targetingBrandingDifferentiatingPositioningCustomer satisfactionMarket penetrationMarket developmentProduct developmentTECHNICAL STRATEGYLooking for pathway to achieve objective, e.g.Self development: branch or franchiseSell commodity or brandSome strategies (Zimmerer & Scarborough, 2002):Market penetrationMarket developmentProduct developmentMarket segmentation

MARKET PENETRATIONIncrease selling of same (old) product in current market (or location) through selling & advertising measures

MARKET DEVELOPMENTIncrease selling by introducing same (old) product or service to new market/segment

PRODUCT DEVELOPMENTIncrease selling by adding new product or service to current market/segment

New product can be a change of current product or completely new product

MARKET SEGMENTATIONA strategy to sort out mass market into some more homogeneous groups

It is a mapping of market into several categories by unifying similar behavior into a segment

Requirements of segment for effective segmentationMeasureableAccessibleLarge enough/beneficial enoughDifferentiableExecutable

MARKETING STRATEGY (Sudharsan, 1995)Result achieve by entrepreneurf (excellence of competitiveness)Excellence of competitivenessf (marketing strategy, business implementation, facing context)Marketing strategyMarketing relationship * marketing mix * timing * resources allocationMarketing relationshipCustomer relation (segmentation & relation), networkMarketing mixProduct, price, place, promotionTimingStarting time, finishing timeImplementationLeadership, marketing, production, finance, human resourceContextEconomic, habits, competition, regulationKotler & Lane (2007)Category of market segmentationGeography: country, state, region, province, city, householdDemography (most measureable) = who: age, gender, family size, family life cycle, income, social economic classPsychography = why: life style, personality, adopted valuesBehavioral = how: knowledge, attitude, use, responseIndividual:GeographyJakarta, Bandung, Yogyakarta, Surabaya, Medan, Balikpapan, etcArea size< 5,000; 5,000-20,000; 20,000-50,000; 50,000-100,000 so forthDensityUrban, sub-urban, ruralDemography< 6, 6-11, 12-19, 20-34, 35-49, 50-64 so forthSexMale, female, unisexIncome< 1M, 1-3 M, > 3MOccupationManager, officer, farmer, pensioner, teacher, etcEducationSD, SMP, SMA, S1, S2, S3, etcReligionIslam, Catholic, Protestant, Jews, Hindu, etcCitizenshipNative, foreignSocial classLower, moderate, upperLife styleConventional, relaxPersonalityCompulsive, friendly, obedienceEvent behaviorCommon event, special eventBenefitQuality, service, economic, speedUser statusNon-user, ex-user, potential user, first time user, regular userLevel of useLight, moderate, heavyLoyalty statusNone, moderate, strong, absoluteReadiness to buyConscious, unconscious, know, interested, want, intent, annoyedAttitude toward productEnthusiastic, positive, ignorance, negative, hateTARGETINGChoose one or more market segment to be target marketPOSITIONINGBond with customerTo communicate product & brand into customers mindIt is a position occupied by a product in the markets mindIt is used to face competition, e.g. Konimex uses Paramex for adult male, Feminax for adult female compare to other unspecified analgesic that say can cure any painBrand positioning eases customers memory to locate your brand in the top of their mind & become loyal by mentioning your brand firstly in shoppingOPERATIONAL TACTICBrandingDifferentiatingPositioningMarketing mixSellingBRANDINGNaming of brand differently from competitors brandsMore than name, needs image, grows loyalty or even emotionInside: brand association, e.g. Mercedes luxury & classic

DIFFERENTIATINGPositive difference from competitors in customers viewMain sources: product, service, people, imageDifference has to be real & unique, it should not just be perception, it has to be really different in content, context, infrastructureGood product is always copied without differentiation your product will become commodity (product without name)experienceservicebrandcommodityimpressionpeople touchdifferentiationprice & profit marginquality, service valuecommoditizationMARKETING MIXBy Jerome McCarthyKnown as 4P: Product, Price, Place, Promotion like car with 4 wheels will not work when 1 wheel is not working4P is combination of marketing tools for influencing & keeping customerEach element of 4P has to be designed for meeting customer benefitPRODUCTProduct Life Cycle

declinematuritygrowthintroductionSalesTimeSource: www.learnmarketing.netCharacteristicsIntroductionGrowthMaturityDeclineSellingLowIncrease fastPeakDecreaseCostHighAverageLowLowProfitNegativeIncreaseHighDecreaseCustomerInnovatorEarly userMiddle majorityLate userCompetitorFewIncrease numberStable number to decreaseDecrease numberMarketing objectiveCreate awareness & willingness to try productMaximize marketMaximize profit while keep marketReduce expense & brandingStrategyIntroductionGrowthMaturityDeclineProductOffer basic productOffer extension of product, service, guaranteeDiversification of brand & modelRelease weak productPriceIncrease plus-costPrice to penetrate marketSame price or better price than competitorsDecrease priceDistributionBuild selective distributionBuild intensive distributionBuild more intensive distributionBe selective: release unprofitable storeAdvertisingBuild awareness & interest in mass marketEmphasis brand difference & benefitDecrease up to necessary level to keep loyal usersSelling promotionUse many selling promotion to attract tryingReduce profit taking from the big demand of customerImprove to push brand transferReduce to minimumPRICETool to communicate product value to marketPrice setting has direct & clear impact to market acceptancePrice is flexible tool: stable in certain time, but suddenly increase or decreasePrice is the only element to get income from sellingPRICE SETTING ALTERNATIVESCost-based pricingCost-plus-pricingBreak even analysis & target profit pricingValue-based pricingCompetition-based pricingGoing-rate pricing

Griffin & Ebert (2002)Determine price setting for distributed products:Price is set higher than market price of similar productPrice is set lower than market price of similar productPrice is set equal or close to average market price of similar product market pricing

Griffin & Ebert (2002)Determine price setting for new products:Floating price setting: convince customer that product is significantly different from other product in marketPenetrating price setting: attract customer with low price to push initial selling, gradually increase price to avoid withdrawal of customer

PLACEKnown as distributionThere is intermediary:wholesalerretailerDistribution channel:Channel 1: direct distribution of consumer goods (producer user)Channel 2: retail distribution of consumer goods (producer retailer customer)Channel 3: wholesale distribution of consumer goods (producer wholesaler retailer customer)Channel 4: distribution through selling agent or broker (producer agent/broker wholesaler retailer customer)

PROMOTIONCommunication technique to stimulate customer to buy product: aware, know further, persuade to like, persuade to buyFinal goal of promotion: increase sellingAlso: improve value perception & control selling volumeMixed promotion:Advertising: non-personalPersonal sellingSales promotion: (1) get out of the crowd (2) message connector (3) trial purchasePublic relations: publicity, build good reputationSELLINGA tactic used for creating long relationship with customer through productSelling integrates company, customers, & relationLevel:Feature sellingBenefit sellingSolution sellingSelling can be used as benchmark for effectiveness of other marketing activities